Crypto-Carnage Concludes? Bitcoin Soars Back Above $11k As Futures Expire

Update 1715ET: As January Bitcoin Futures approached expiration...

So cryptocurrencies were suddenly bid...

As it seems the 9500 Bitcoin net speculative short position sparked a squeeze that ramped from below $9500 to over $11,500..


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Update 1200ET: Bitcoin has rebounded over $1000 off its lows, breaking back above $10,000...

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Having rebounded after the BitConnect headlines sent prices plunging, cryptocurrencies are more sedately limping lower this morning with Bitcoin dropping back below $10,000. The question on everyone's mind, did the bubble just burst or do you BTFD?

It's been an ugly week for cryptos...

With the heatmap a sea of red...


... And Bitcoin back below $10,000:

... down 50% from its all time highs.


Bitcoin broke its 100DMA - which has acted a broad support in the last year...

And Bitcoin Futures at the lowest since inception on heavy volume (note that Bitcoin spot topped as CBOE unleashed its futures contract)...

Notably - today is the expiration of the first CBOE Bitcoin futures contract. CFTC reports a 1907 contract net short position (around 9500 Bitcoin short) and one wonders what impact that is having on the market today)

Bitcoin is now flirting with the key 9,978 support level, which Goldman yesterday noted is critical for the future level of bitcoin.  As Goldman's chief technician wrote, "Watch for signs of a base ahead of 9,978. Setup weakens through 9,836. Turn neutral/cautious through 7,882."


Which means buyers materialize or it's all downhill from here.

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Piling on, during his earnings call this morning, Bank of America customers are welcome to buy Bitcoin and other cryptocurrencies, just not through the lender’s Merrill Lynch unit, Chief Executive Officer Brian Moynihan said.

“We have limited our relationships and I think the thing speaks for itself,” Moynihan said Wednesday on a call with reporters after reporting fourth-quarter results.

“We’ve basically told people that they could buy it in other accounts, but not at Merrill Lynch. And so it’s just our view that customers should be careful here.”

Merrill Lynch told employees last month not to offer clients Grayscale’s Bitcoin Investment Trust, one of the few financial instruments directly holding the digital coin. Moynihan said Wednesday the bank is concerned with not being able to identify who’s buying and selling.

Which led Bloomberg  to ask the question: Will the cryptocurrency go down as one of history’s most infamous bubbles, alongside tulipmania and the dot-com craze?

In a follow-up to our post from a month ago, Bloomberg looks at where we are now relative to 'the big bubbles'...

As the chart shows, the cryptocurrency’s nearly 60-fold increase during the past three years was truly extraordinary.

The magnitude of Bitcoin’s boom (before it lost as much as 48 percent from its Dec. 18 high) suggests investors have reason to be worried.

However, Bulls say that Bitcoin’s boom is far from over, and that there’s more to analyzing a market than just measuring price gains. While the recent tumble has alarmed some investors, the cryptocurrency has bounced back from several previous swoons exceeding 50 percent. If Bitcoin did become a widely-accepted form of digital gold, as predicted by Cameron Winklevoss of Facebook fame, it could have a lot further to surge.

There’s also more than one way to slice a rally. On an annualized basis, Bitcoin’s three-year rise has been slower than the gains seen during several of history’s biggest manias -- most notably the Mississippi and South Sea bubbles.

Still, skeptics abound.

Howard Wang of New York-based Convoy Investments LLC and Jeremy Grantham of GMO LLC have analyzed Bitcoin’s advance relative to past frenzies and concluded that it’s unsustainable. Grantham, who helps oversee about $74 billion as GMO’s chief investment strategist, summed up his concerns in a Jan. 3 letter to investors:

“Having no clear fundamental value and largely unregulated markets, coupled with a storyline conducive to delusions of grandeur, makes this more than anything we can find in the history books the very essence of a bubble,” he wrote.

However, as CoinTelegraph notes, although it’s not hard to find plentiful online resources asserting there’s no doubt Bitcoin is a huge bubble soon to burst, some people provide alternative views. One of them is Ben Davies, co-founder of another cryptocurrency called Glint. He thinks people are not looking at the bigger picture of Bitcoin, and that’s causing them to incorrectly see it as a bubble.

Davies also thinks the way people often compare Bitcoin to the bubble associated with tulip bulbs doesn’t hold water. He notes that although the prices of tulips soared then experienced a sharp downturn, that historic event is a "poor comparison." He asserts the price increases associated with tulips were not similar to the cryptocurrency phenomenon.

However, even Davies admits Bitcoin “has all the hallmarks and antecedents that are the precursor to a bubble.”


tmosley Cognitive Dissonance Wed, 01/17/2018 - 17:37 Permalink

How soon we forget.

Tether is the Fed of crypto, except Tether doesn't have state backing. Eventually they are going to get their door kicked down by some police agency.

As such, people who are on the right side of crypto (ie who aren't salty peanutz or squirrel chasing speculators) will finally get to see what happens when justice is served in a manipulated market.

In reply to by Cognitive Dissonance

SuperRay tmosley Wed, 01/17/2018 - 18:01 Permalink

Seriously? Justice is served in a manipulated market.  What planet are you on? Every major bank, and the federal reserve, manipulate markets all day. Is justice being delivered upon them from above.  You're just another zombie who thinks the status quo is just fine and these upstarts who think they're going to make history with cryptocurrencies (which indeed they might do) should be the ones put in jail.  Is that what you're saying? They'll get "Justice" because they dare to try something to escape the Rothschild Zionist Bankers trying to enslave everybody? What a fucking dumbass.

In reply to by tmosley

JuliaS saldulilem Wed, 01/17/2018 - 17:31 Permalink

Best thing about BTC - lots of cheap graphics cards hitting second hand market each time the curve dips. Come on! Momma needs a new pair of GPU's to crunch fluid dynamics equations. I wish they came with an odometer. The way miners drive their chips you never know whether your thing is going to go poof the day after you buy it.

In reply to by saldulilem

Cognitive Dissonance JuliaS Wed, 01/17/2018 - 17:38 Permalink

While the GPU fan might wear out, the heating and cooling cycle is what kills motherboards and cards. Since they never shut the cards down, I wouldn't be too worried.

Electronics don't 'wear' out, at least not the silicon itself. The that's another story. Anyone else remember a huge batch of bad capacitors out of China that found their way into about a gazillion motherboards some years back?

I do. I owned two of the motherboards.


In reply to by JuliaS

JuliaS Cognitive Dissonance Wed, 01/17/2018 - 18:12 Permalink

Graphics cards do age. I've lost a couple, doing fluids and SFM analysis. Fans dying is no big deal. If the temps get high, capacitors sometimes suffer, but good cards are built to accommodate high temps. The problem is that miners typically don't give a rat's ass, about long term longevity. To them it's all about the bottom line. They treat cards as throwaways. They build rigs inside apple crates with poor ventilation and on top of that overclock hardware to the highest limit. I don't mine, but I have many friends on the tulip bandwagon. They loose hardware left and right. PSU's mostly, but graphics cards also pop periodically.

I'm making more of a joke here. I do my work on Quadro's. They aren't popular with miners, who'd rather stack up on cheap AMD's. I have no use for those whatsoever.

In reply to by Cognitive Dissonance

zebra77a Cesare de Borgia Wed, 01/17/2018 - 17:38 Permalink


Coinbase not paying back accounts…

Bitcoin blockchain cannot talk to Monero blockchain cannot  talk to Etherium blockchain.

In order for you to 'buy monero and sell bitcoin' the exchanges had to make virtual accounts in the middle.  As soon as they did they they also made 'fake crypto inventories' that allowed for instantaneous transactions, but the crypto being traded was only virtual!!  So were the fake accounts with fake liquidity they used to 'whale trade' against their own clients.   Virtual crypto is completely UNLIMITED nobody knows what the ratio of fake bitcoin to real bitcoin is!. Bitcoin had value in that people perceived that there could never be more than 21,000,000 bitcoins.   On the exchange they could could make infinite virtual bitcoin.  Only when you took it off exchange through a bank transfer OR a blockchain withdrawl were they forced to supply REAL BLOCKCHAIN CRYPTO..

Whenever too many people requested funds, and or crypto they did not actually have, they simply blamed a hacker shut the whole exchange down and kept the balances.

Exchanges are COMPLETELY UNREGULATED.  They can do *anything* they want.

EXCHANGE CRYPTO AND FUTURES CRYPTO ARE THE EXACT SAME. The only difference is Exchanges don't have to pay back their clients - there not regulated!

In reply to by Cesare de Borgia

Abiotic Oil zebra77a Wed, 01/17/2018 - 18:05 Permalink

...and unless you have been on Coinbase for awhile, the weekly limits, just to sell crypto to your in-house fiat wallet, are extremely limited.

A rush for the exits will be impossible.

Coinbase can shut down to prevent selling for fiat but the rest of the world will keep crashing, until Coinbase can afford to come back online. 

In reply to by zebra77a

zebra77a Abiotic Oil Wed, 01/17/2018 - 18:16 Permalink

Nobody is getting their money back. Coinbase fully plans to hit and run their client base eventually once too many catch on and start withdrawing.  A 'hacker' cue-left will make sure the accounts are drained before they ever have to pay..


And... their faking their FDIC Insured Bank Account Status they claim they have  as well. Just another feature of the con..…

In reply to by Abiotic Oil

Jambo Mambo Bill zebra77a Wed, 01/17/2018 - 23:03 Permalink

I am just a participant, and I am also concerned with exchanges liquidity, specially Coinbase, however my experience until now has been good, I can transfer 10's of thousands out any giving day with no issues... they do have expensive charges dough....

Now the examples you provided are no more than pure fear game, the guys that claimed didn't receive the cash were retards that didn't know how Coinbase or for that matter any bank operates, when you make a international transfer, it takes couple of days for the cash clear, folks are requesting a 1-10k withdraws and expecting it to show up on their account in 24hs, it could, however give it up to 3days before spreading bullshit.

Anyway I think the withdrawing from cryptos is completely inadequate and exchanges lack liquidity, in case you are dealing with higher cash value use multiple bank settlements exchanges and spread your risk, just common sense, however in the end of the day expect the unexpected, this market is wild west, risky as hell, play it carefully.

In reply to by zebra77a

Blackfox Wed, 01/17/2018 - 17:31 Permalink

Serious question I have, if the exchange can only handle 7 transactions per second. How does it manage to crash so fast?


It's no longer little people buying /selling bitcoin is it? Is just hedge funds and major investors at this stage of the game?

Sabibaby Blackfox Wed, 01/17/2018 - 17:34 Permalink

The slow transactions are BTC between exchanges if you're on the exchange transacting from USD to btc you aren't using the blockchain transaction.


and I just bought $200 at 9500 earlier today and I'll probably buy more when I get paid on Friday unless it rockets up but I'm guessing it will still be between 8k-10k. If you use coinbase usd wallet and transfer to gdax you can set buy/sell limits and buy/sell without fees. There's no reason to put a bunch of money down all at once unless you really think it's hit bottom.

In reply to by Blackfox

tion natronic Wed, 01/17/2018 - 19:18 Permalink

The exchanges are the vehicles.  Don't get too caught up in the narratives. The narratives are obfuscating something and being used as cover.  The main change with the futures is now the people pushing volatility can make money on both sides of each wave.  JMO it's not just bankers driving this price action.  People need to understand that it is not illegal for the exchanges to participate in insider trading or using bots to help paint the tape, maybe via market buy/sell order manipulation.  People should also heed what Zebra is saying.  As for anyone holding 'btc' (really, a claim on bitcoin that the exchange may or may not have) on an exchange to milk volatility, I hope they realize that no one will cry for them when they get Mt. Gox'd. 


In reply to by natronic

2rigged2fail Brazen Heist Wed, 01/17/2018 - 20:12 Permalink

When J Demon came out at  roughly 6K and said it was a fraud and bumped to 3.5K I think the banks bought in big time.  They prob own a large majority of all coins now.  I mean when you can just use depositors money or make it out of thin air its not that hard.  All will go up again big time and then dump.  The big banks are going to make a fortune in this unregulated market.  If we are nimble we can too.  He who owns the fake fiat printing press makes the rules....for now. 

In reply to by Brazen Heist